- 20 Marks
Question
a. Identify the books of prime entry for the following transactions, using a tabular format:
i. Fixed amount paid weekly to employees to buy credit cards for data;
ii. Opening entries in the ledger accounts;
iii. Invoice sent to a customer;
iv. Office equipment purchased on credit;
v. Transport expenses paid to marketing staff for local running;
vi. Transfer of balances from one account to another;
vii. Goods returned to a supplier;
viii. Carriage inwards on goods meant for resale;
ix. Settlement of debt by exchange of motor vehicle; and
x. Early settlement of discount received. (5 Marks)
b. In the books of Morire Limited:
Trial balance as at March 31, 2025
| Debit ₦’000 | Credit ₦’000 |
|---|---|
| Building at cost 120,500 | |
| Equipment at cost 26,500 | |
| Motor vehicles at cost 17,200 | |
| Accumulated depreciation March 31, 2025: | |
| – Building | 5,545 |
| – Equipment | 26,500 |
| – Motor vehicles | 17,200 |
| Profits from operations | 14,885 |
| Inventory, March 31, 2025 27,220 | |
| Bank current account 8,400 | |
| Trade payables | 11,370 |
| Bank deposits 25,000 | |
| Interest received from bank deposits | 27,220 |
| Share premium | 8,400 |
| Ordinary shares of ₦1 each | 85,000 |
| Ordinary dividends paid 3,500 | |
| Preference dividends paid 2,000 | |
| 10% loan notes | 30,000 |
| Loan interest 1,500 | |
| Receivables 19,300 | |
| Allowances for doubtful receivables, March 31, 2025 | 3,500 |
| 10% preference shares | 20,000 |
| Retained earnings, April 1, 2024 | 1,500 |
| Total 251,120 | 251,120 |
Additional Information
-
Accrued loan interest is ₦1,500,000.
-
Estimate of income tax is ₦5,000,000.
-
Preference shares are treated as debt instruments.
-
The company wishes to maintain the bank deposits for the next three years.
-
Interests on deposits are transferred to entity’s bank current account.
Required:
i. The statement of profit or loss for the year ended March 31, 2025. (4 Marks)
ii. The statement of changes in equity for the year ended March 31, 2025. (3 Marks)
iii. The statement of financial position as at March 31, 2025. (8 Marks)
Answer
a. Transactions and Books of Prime Entry
| Transactions | Book of prime entry |
|---|---|
| i. Fixed amount paid weekly to employees to buy credit cards for data | Petty cash book |
| ii. Opening entries in the ledger accounts | Journal |
| iii. Invoice sent to a customer | Sales day book |
| iv. Office equipment purchased on credit | Journal |
| v. Transport expenses paid to marketing staff for local running | Petty cash book |
| vi. Transfer of balances from one account to another | Journal |
| vii. Goods returned to a supplier | Returns outwards or purchases returns book |
| viii. Carriage inwards on goods meant for resale | Purchases day book |
| ix. Settlement of debt by exchange of motor vehicle | Journal |
| x. Early settlement of discount received | Cash book |
—
b. Financial Statements
Morire Limited – Statement of Profit or Loss for the year ended March 31, 2025
| ₦’000 |
|---|
| Profit from operations 14,885 |
| Investment income 27,220 |
| Finance cost (5,000) |
| Profit before tax 37,105 |
| Income tax expense (5,000) |
| Profit for the year 32,105 |
—
Statement of Changes in Equity for the year ended March 31, 2025
| Ordinary shares ₦’000 | Share premium ₦’000 | Retained earnings ₦’000 | Total equity ₦’000 |
|---|---|---|---|
| Balance April 1, 2024 85,000 | 8,400 | 1,500 | 94,900 |
| Profit for the year – – 32,105 | 32,105 | ||
| Dividends paid – – (3,500) | (3,500) | ||
| Balance March 31, 2025 85,000 | 8,400 | 30,105 | 123,505 |
—
Statement of Financial Position as at March 31, 2025
| ₦’000 |
|---|
| Non-current assets |
| Property, plant & equipment 114,955 |
| Investment: Bank deposit 25,000 |
| Total Non-current assets 139,955 |
| Current assets |
| Inventories 27,220 |
| Receivables (19,300 – 3,500) 15,800 |
| Bank balance 8,400 |
| Total Current Assets 51,420 |
| Total Assets 191,375 |
| Equity |
| Ordinary shares 85,000 |
| Share premium 8,400 |
| Retained earnings 30,105 |
| Total Equity 123,505 |
| Non-current liabilities |
| 10% preference shares 20,000 |
| 10% loan notes 30,000 |
| Total Non-current Liabilities 50,000 |
| Current liabilities |
| Income tax payable 5,000 |
| Trade payables 11,370 |
| Accrued loan interest 1,500 |
| Total Current Liabilities 17,870 |
| Total Equity & Liabilities 191,375 |
- Topic: Trial Balance Adjustments
- Series: MAY 2025
- Uploader: Samuel Duah